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The euro and the yen fall against the dollar that reaches new highs after the meeting of the US Federal Reserve

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After the United States Federal Reserve (Fed) raised its interest rates by 0.75 basis points on Wednesday and hinted that it will increase them further this year and in 2023, the euro fell to its minimum value against the dollar. for 20 years, at the level of $0.98.

In addition, tensions with Russia over the war in Ukraine lead investors to avoid risk and buy dollars, considered a safe currency in times of crisis.

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The euro was trading at $0.9833 as of 0730 GMT, versus $0.9891 in late European forex trading the previous day.

The Fed raised its interest rates to between 3 and 3.25%, a decision that the markets had already discounted, but the forecasts of its members on rates are restrictive, of an increase of another 125 basic points until the end of the year and a rise of another 25 basis points in 2023, to 4.6% (3.8% in June projections).

Japanese government seeks to support the yen

Also from Japan, the Finance Ministry announced on Thursday that it intervened in the foreign exchange market to support the yen, which has slumped against the dollar since March.

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It is the first time since 1998 that Japan has made this type of intervention in favor of its currency.

Tokyo had already intervened in 2011 but with the opposite objective: to lower its currency against the dollar, an action that had been arranged with the other G7 countries.

The measure was adopted after the dollar reached new levels on Thursday not reached in 24 years against the Japanese currency, after a new rise in Federal Reserve rates, followed by the maintenance of the ultra-flexible monetary policy of the Bank of Japan (BoJ)

Unlike other large economies that raise rates to contain price increases, the Bank of Japan maintains its ultra-loose policy of the last decade to achieve sustained inflation of 2%.

This has led to a devaluation of the yen in recent months which, in turn, has caused imports to become more expensive in the world’s third largest economy. (YO)

Source: Eluniverso

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